We find mix use to be a very attractive asset class, because in essence, there’s more than one, draw for the property itself. In terms of why we’re including the $475 million of senior loan capacity, the 18% I think it’s really to address the question that I think Steve DeLaney from JMP just asked, which is really about our investment capacity, do we anticipate making new loans in the future. And while certainly the bar is high as Bryan mentioned, our goal is to invest the capital over time, at the right time. But just given the significant amount of cash buildup that we have the $154 million, which represents again, more than 20% of our shareholder equity, we want to really highlight in these graphs that we do have number one, significant capacity, we’re not sure exactly what asset classes they will be invested in.
So, we certainly aren’t going to categorize in any specific assets. That’s why we kind of show it as a broken out 18%. But we do want to highlight in this graph that we do have such significant capacity, and that when we do make that investment, that it will really change – the asset type geographic and other diversification characteristics of our portfolio.
Jade Rahmani: In terms of credit outlook at this point, would you say that office is really the crux of what you’re most concerned about? There’s also some mixed performance in mixed use, but on the other hand, multifamily and self-storage, looks to be pretty resilient at this stage. Do you think it’s still early days for the other sectors and office as the secular headwinds or this is this is a story that’s unfolding?
Bryan Donohoe: I think, absolutely, from a fundamental’s perspective, that office is the focus point in the tip of the spear Jade. I think the capital markets and the rise in rates is causing some macro changes in behaviors as it relates to repayments and otherwise. But offices where the fundamentals have degraded significantly, has been well published and the asset classes with lower CapEx schedules, as you mentioned in self-storage, in apartments, in industrial are holding up better from an expense as well as a revenue perspective.
Jade Rahmani: Thanks for taking the questions.
Bryan Donohoe: Appreciate it, Jade.
Operator: The next question comes from Doug Harter with Credit Suisse. Please proceed.
Douglas Harter: Thanks. I guess two of the problem loans this quarter were kind of Chicago office. I guess as you look at that kind of what similarities did they have? What differences did they have that led to the kind of the big reserve on one, but kind of a favorable outcome on the other? And then, kind of along those lines, are there other loans in the portfolio that kind of looked like the one that requires a larger reserve?
Bryan Donohoe: Yes, I’ll start and I’ll let Tae-Sik weigh in as well. But I touched on the flexibility that we had with respect to the asset that was resolved, Doug. And I think that flexibility and the ability to really repurpose. Obviously, we’re hearing so much about this conversion to residential within the confines of the building. The resolution we talked about, was not necessary to keep the building structure at all, in all likelihood, but allow for total repurposement of the asset. Yes, so where we built the reserve is actually something where we’ve got it’s fairly well, leased north of 80% with a pretty long wealth and cash flow into the mortgage. But given capital markets and headwinds around that geography, we decided to take the movement that we did. But Tae-Sik, I’ll let you weigh in further there.
